Washington Internet Daily: "'Marketplace Fairness' Bills Need Clarification, Tax-Supporting Group Says"

March 6, 2013

Below is yesterday's article in the Washington Internet Daily covering today's United States of eBay DC Fly-In, including quotes from eBay Inc.'s own Brian Bieron:

Owners of small online businesses are scheduled to arrive on Capitol Hill Wednesday to voice their concerns over the Marketplace Fairness Act of 2013 (HR-684, S-336), which would allow states to collect sales tax on online purchases made by in-state residents from out-of-state retailers. The bills will harm small businesses by having a too-low small-seller exception of $1 million, eBay Senior Director of Global Public Policy Brian Bieron told us. eBay organized the small-business trips to the Hill. The Streamlined Sales Tax Governing Board (SSTGB) — which has been a major proponent of e-commerce sales tax bills — raised concerns over the bill's language during its federal implementation working group's public conference call Monday.
 
"The current exemption in the bills is not large enough to help small businesses," Bieron said. The exemption’s level of $1 million "would capture many small businesses,” he continued. Bieron said he was reluctant to propose a different exemption level, but he suggested looking at other definitions of small business size. “There are examples in the existing real world ... as to where government currently defines small businesses, which we think would be helpful, at least in providing some perspective,” he said. Bieron cited the Small Business Administration’s Office of Size Standards. Its definition of $30 million in annual receipts is much larger than those of the bills, which is "not to say that their number is the number that should be in the law," he said. Regardless of where the right number is, “there should be a small business exemption that actually protects small businesses,” he said.
 
The bill needs additional language to clarify that states that signed the Streamlined Sales and Use Tax Agreement (SSUTA) will have collection authority, said Craig Johnson, SSTGB executive director, on the call. Currently the bill is unclear on whether members will have collection authority if they do not also meet the bill’s federal minimum simplification requirements, he said. Johnson said he met with the bill’s drafters and “was repeatedly assured that there was no intention [to require] SSTP full member states to do anything else than what they’re doing now,” referring to the Streamlined Sales Tax Project. The current language was included to ensure that states meet certain simplification requirements even if SSUTA requirements change, he continued. “They do intend on making the textual correction,” which is “good news, and it clarifies” the law.
 
The law would require SSTGB-member states to publish notice 90 days before they can begin collecting the tax — non-members cannot begin collecting the tax until six months after they enact legislation that establishes the minimum simplification requirements — but does not specify what that notice requires, said Tim Jennrich, tax policy specialist for Washington state’s Department of Revenue. “What does notice mean? Notice is not defined in the Marketplace Fairness Act,” he said. While the lack of proscriptive language allows states to be flexible in how they publish notice that they will be collecting ecommerce sales tax from out-of-state retailers, some members of the SSTGB might want clarity on how specifically they should publish that notice, he continued.
 
Virginia plans to have a state law in place so that the state can begin collecting the tax as soon as possible, according to Mark Haskins, policy development director for Virginia’s Department of Taxation. State legislation “has passed. It’s waiting the governor’s signature,” which it’s likely to get, he said. “By July 1, we would have legislation in place that we think [meets] the minimum simplification requirements and would put us in line [to collect e-commerce sales tax] as soon as the federal bill passes,” he continued. “The only thing that would have to happen after the federal law passes would be [meeting] the notification requirement time frame.”